Top 10 Report – February 5, 2020

Market Insight

The stock market has rebounded powerfully so far this week. The major indexes all recovered to varying degrees. The NASDAQ was the clear leader, finishing yesterday’s session at new all-time highs on heavier volume. The tech-heavy index was followed by the S&P 500 and then the DOW, while the Russell 2000 maintained its position as the laggard index.

The distribution count remained unchanged at 5 days on the S&P 500 and 4 days on the NASDAQ, which isn’t all that high, not to mention, the NASDAQ closed at a new all-time high and the S&P 500 is close behind.

In the land of leading stocks, beaten down semiconductor names rebounded sharply with the market over the last couple days. Additionally, there were plenty of names from across the market’s leading industry groups that continued to exhibit strength and make worthwhile progress to the upside.

However, despite the powerful rebound in the major indexes and many of the market’s leading stocks over the last couple days, there were noticeably fewer actionable setups to choose from as of yesterday’s close.

Regardless, there are still plenty of earnings reports ahead and there has been no shortage of headline risk, which so far, has led to increased uncertainty and wild volatility.

So, continue to pay close attention to how rotation takes shape and focus on the strongest names in the strongest groups, with the best fundamentals. These are the stocks you ultimately want to be concentrated in.

Keep your emotions in check, stick to your rules and your plan and wait for the perfect setup and entry to develop, or do not trade. Remember, “buying right” is your best defense.

The Indicies

The NASDAQ reversed course and exploded higher over the last couple days, finished yesterday’s session 2.10% higher and closed at a new all-time high as volume expanded, which is a sign of strength.

The small-cap Russell 2000 reversed course and exploded higher over the last couple days, although it was unable to reclaim its 21-DMA and finished only slightly above its 50-DMA, still the clear laggard of the bunch.

The S&P 500 reversed course and exploded higher over the last couple days, finished yesterday’s session 1.50% higher and closed slightly below its recent, prior all-time high as volume expanded, which is a sign of strength.

The DOW reversed course and exploded higher over the last couple days, although it finished yesterday’s session well below its recent, prior all-time high and was unable to reclaim its 21-DMA, like the NASDAQ and S&P 500, which both exhibited much more strength.



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February 5, 2020